BALTIC CLASSIFIEDS GROUP PLC (BCG) Q4 2026 Earnings Call Transcript

Good morning everyone.

Despite a challenging market environment, the Citi once again demonstrated the resilience of its business model. We delivered the solid financial results with both revenue and EBITDA growing by 7% while maintaining our industry-leading EBITDA margin of 78%. The significant headwind came from Auto24 business line, where the introduction of the the new car tax in Estonia reduced listing volumes. Excluding this one-off impact, the rest of the group delivered double-digit growth. Looking across our verticals, real estate was our strongest performer, growing by impressive 17%. Jobs and services also had an excellent year, accelerating from 7% growth in the first half of the year to 11% in the second half of the year, resulting 9% growth for the full year. Automotive remained stable despite significant volume headwinds. Meanwhile, our generalist marketplace continued to deliver a steady growth of 3%. Given our exceptionally strong balance sheet and attractive market valuations, we significantly accelerated our share buyback program. By mid-June 2026, the company has that it purchased over 10% of its issued share cap. Finally, I am pleased to announce that the board has proposed a final dividend of 3.1 euro cents per share, representing a 19% increase compared to a year ago, subject to shareholder approval at AGM. One of the key indicators we closely monitor is our leadership position related to our nearest competitors. I'm pleased to report that our leadership remains exceptionally strong across all major marketplaces, with traffic levels ranging from five to more than 60 times those of our closest competitors. Overall, our traffic mix has remained very stable. The majority of the visitors continue to access our marketplace directly, which reflects the strength of our brands and loyalty of our users. The traffic from Gen.AI platforms remain neglectable. While this channel is growing, it has primarily shifted traffic away from traditional search engines. while the direct traffic continues to grow.

I think this is a very important thing to highlight.

Our people continue to be one of the BCG's greatest strengths. In our latest employee engagement survey, more than 95% of employees said they are proud to be part of BCG. This level of engagement is reflected in our exceptional average employee tenure of eight years, which is remarkable for a technology company. We also remain committed to diversity and inclusion. Our workforce is well-balanced with almost equal gender split, and women hold 50% of leadership positions. This places BCG among top performers within POTC 250 for gender and diversity. Finally, we continue to make a good progress on sustainability Since 2022, we have reduced our CO2 emissions by 75%, supported by our continued transition to renewable energy, which now accounts for 88% of our total energy consumption. Now I'll hand over to Lina to speak about finance in more detail.

Thank you, Stinas. Morning, everyone. I'll now take you through the financial results in detail, starting with the revenue performance. on the right side you see total revenue information over the past two years by business line on the left the classifieds revenue accounting for 91 percent of groups revenue and split by by business line as well the b2c revenue that's business plan subscriptions and c2c customers using self-service mainly individuals the group delivered revenue of 88.5 million euros for the year a seven percent increase on the prior year growth was driven by continued monetization progress across our four classified revenue streams and last spring we implemented surprising changes across all our major platforms and these have contributed to performance throughout the entire year and as as in previous years we introduced b2c pricing and packaging changes from september and october arturas will cover the key drivers of growth in more detail in later in the presentation but in summary real estate representing is 29 of youth revenue was again our strongest performing business line with revenue growing 17 to 26 million and b2c grew 20 percent of real estate and c2c grew 12 auto is representing 36 percent of group revenue and was flat at 31.5 million auto b2c grew 11 but this was upset by a nine percent decline in c2c revenue jobs and services generating one-fifth of the group revenue grew nine percent to 17.4 million with both b2c and c2c each growing nine percent generalist being 15 from group revenue and predominantly C2C grew 3% to 13.6 million. In total, B2C revenue representing 54% of group revenue grew 13%, and C2C representing 37% of group revenue grew 1%. The remaining 9% comprises advertising and ancillary revenues, which together were broadly flat at 8.1 million euros. I'm now turning to cost and profitability. People costs remain our largest operating expense representing approximately 14% of group revenue and almost 65% of operating costs before depreciation and amortization at 12.8 million. Programming development costs are within people costs and handled in-house. The 2% increase reflects three main factors. A growth in head count. We ended the year with 163 full-time employees. That's seven full-time employees more than a year ago annual salary reviews in line with baltic wage inflation approximately 10 percent and these were significantly upset by performance share plan yes costs decrease 2026 has 0.3 million cost in relation to psp down from 1.9 million in the prior year that's reflecting performance below the psp targets marketing costs represent 1.5 percent of revenue and the majority of groups traffic is direct in search traffic is minimal and this year we had some targeting marketing expenditure particularly across social media channels in the younger audiences it costs which is third party services costs continue to be one percent of revenue and other costs predominantly administrative and data acquisition costs five percent of revenue our total operating costs excluding depreciation and amortization were 19.9 million euros, an increase of 8% on the prior year. Maybe back to the previous slide, EBITDA grew in line with revenue 7% to 68.6 million euros. The EBITDA margin was maintained at 78% unchanged from the prior year. The low EBITDA depreciation and amortization decreased 24% to 8.3 million, and the principal driver was a 26% reduction in amortization of acquired intangibles, reflecting the full amortization of customer relationship assets recognized on the 2019 and 2020 acquisitions. This reduction is a reason why operating profit of 60.4 million grew faster than EBITDA at 13%. Operating profit adjusted for the acquired intangibles amortization grew in line with Now moving to our cash generation, debt, and leverage. Cash generated from operating activities grew by 5% to $69.9 million and maintaining our cash conversion ratio at 99%, consistent with recent years and demonstrating the quality of our earnings. After income tax and net interest payments, net cash inflow from operating activities was $60.4 million. looking at the net debt bridge we started the year in a near net cash position with net debt of 4.4 million and over the course of the year we drew on new debt facilities to fund accelerated share buybacks program i will expand on the capital allocation more on a later slide in january 2026 we refinance our existing debt facilities the new arrangement with the bank comprises a 125 million term loan facility which may be drawn in trances and a 20 million revolving credit facility at the same time we repaid in full the 15 million remaining under the previous facility and by the end of financial year 73 73 million had been drawn under the new term loan our operating cash flows combined with partial drawings under the new debt facility funded share purchases for cancellation, totaling almost $77 million, that's the payment amount, and purchases of company shares to EBIT for $3.1 million alongside dividend payments of $18.7 million during the year. We closed the year with net debt of $46.2 million, representing leverage of 0.7 times EBITDA, up from 0.1 times at the prior year end. And since April 2026, a further 45 million has been drawn to continue the share buyback program bringing the total dividend drawings under the new facility to 118 million as of the date of this announcement the remaining term loan capacity is 7 million with the full 20 million revolving credit facility remaining undrawn in this slide you see the consolidated profit or loss summary the revenue ebitda operating profit and adjusted operating profit had been explained earlier and before i go the rest of the lines the only adjustment to our financial performance metrics is amortization of acquired intangibles with the deferred tax impact starting from net finance costs it counted to 1.8 million a reduction from 2.4 million in prior year and although interest expense increased in the second half of 2026 following drawings under the new debt facilities this was more than upset by a lower average debt balance during the first half of the year and also interest income earned on the cash balances profit before tax grew by 15 percent to 58.6 million and the effective tax rate increased from 12 to 13 percent primarily as a result of corporate income tax rate in Lithuania rising from 15% to 16%. Income tax expense was $7.7 million. From 2026, the Lithuanian corporate income tax rate increases from 16% to 17%. And following the repayment of historical intercompany funding, the group Estonian operations are now generating distributable profits. Now, under the Estonian and Latvian tax regimes, profits are taxed only when distributed. The group continues to assess capital location opportunities, including reinvestment and M&A, and no decision has been made to distribute profit from Estonia or Latvian subsidiaries, but if we were to decide to do so in the foreseeable future, we would recognize an immediate one-off tax charge of around 6 million euros on accumulated profits. And thereafter, profits generated in Estonia and Latvia would give rise to an annual deferred tax charge at the applicable rates of 22% and 20% respectively, to the extent they are expected to be distributed. Accounting profit for the year grew 14% and adjusted net income. The reference metric used to our capital allocation policy grew 7% to $58.1 million. It adds back the post-tax impact of acquired intangible amortization and the associated deferred acts. and on a per share basis suggested basic eps grew nine percent to 12.3 euro cent and basic eps grew 16 to 10.8 euro cent both eps measures grew faster than the net income growth reflecting the reduction in the weighted average share count resulting from the share buyback and cancellation program i will now turn to our capital location policy now since ipo in 2021 our capital policy has been to return materially all adjusted net income to shareholders historically through dividends of around one-third and the balance through share buybacks and debt repayment during the first half of 2026 we became net cash positive in 2026 the board concluded that the company's share price didn't reflect the underlying fundamentals or long-term prospects and we considered market concerns regarding the long-term impact of AI to be materially more cautious than our own assessment, and huge recent trading headwinds as temporary. Accordingly, we introduced leverage to fund an accelerated share buyback program. The $145 million debt facilities secured in January provided the capacity to execute the strategy. By year-end, we had repurchased and canceled, 7.6% of companies issued share capital, increasing to 10% by mid-June. Now, following shareholder approval in May, we intend to continue repurchasing shares subject to market conditions, available authority, and the group's capital position. At the September AGM, we expect to seek authority to repurchase up to 15% of the company issued share capital. As always, these authorities represent maximum authority rather than intention to utilize it in full. Continuation of the accelerated share buyback program beyond the group's existing financing capacity would require additional debt financing. And the board has not established fixed thresholds for either leverage or share price. Capital location decisions will continue to be based on information available at the time. Turning to dividends, the board has also adopted a progressive ordinary dividend policy, and under this policy, the ordinary dividend will go broadly in line with adjusted net income while preserving flexibility in the group's broader capital allocation framework. Accordingly, we're recommending the final ordinary dividend of 2.8 euro cents per share, together with a special dividend of 0.3 euro cents per share. Together, this maintains our distribution score 2026 at approximately one third of adjusted net income consistent with our previous policy during this transition year and in total dividends in respect of financial year 2026 would amount to 4.4 euro central share which represents a 16 percent increase on the total dividend paid versus last year and finally we will continue to evaluate evaluating investment opportunities, including M&A and share buybacks, while maintaining flexibility in how those opportunities are financed. As announced today, this includes the position of Denobanka.lv, strengthening our data capabilities in the Latvian real estate market. This concludes the financial section of our presentation and I will now hand over to Artura.

Thank you, Lina. I will take over and we'll review our strategic progress across core business lines, diving to the KPIs and provide an overview of the product development. Real Estate was our clear growth champion this year. Revenue delivered a 17% increase to reach 26 million. In the B2C segment, the monthly number of brokers grew by 3%, and the number of clients reached a record high of 5.3 thousand. It was primarily driven by small brokers transitioning from C2C customers to become B2C customers. At the time, B2C ARPU increased by 16%, to now 252 euros. The improvement was supported by price and packaging changes implemented in autumn. Besides Apple Group, these updates were designed to encourage customers to use a wider scope and try out a wider scope of our services. They were also underpinned by a data product update from the previously acquired Unto platform. In the C2C segment, we achieved significant yield improvements. Revenue per listed ad grew by 26%, now 80 euros. These increases reflect a continuous strategic shift for premium, longer-duration packages. They are now chosen by more than half of our customers. This shift partly affected an 11% decline in the number of listed ads. The market is hot, and properties do sell faster. Concurrently active ads declined by 6%. Consequentially, transactions required fewer listing extensions that are part of this metric. From a market perspective, activities strengthened across the region. This momentum was supported by lower interest rates and improving environment. Total transaction volumes increased by 5% over the past four months. Average apartment prices in both the capital cities also rose by 5%. Lithuania was the main driver of this regional activity. Residential transactions here surged by 12%, and this surge was partly due to anticipatory spending ahead of changes to the national pension system. As in April, individuals were allowed to redeem part of their pension savings freely. Our market leadership remains as strong as ever. KB and C24 combined had a 16-times lead against the number two in Estonia, while in Lithuania, Rwadas leads the next competitor by a record 62-times. Our automotive business delivered a resilient performance. Revenue remained flat at $31.5 million. While total growth was muted, this headline figure must declare divergence between B2C and C2C segment. In the B2C segment, the average number of dealers declined slightly by 2% from record levels to 3.6,000 dealers. The decrease was primarily driven by weakened market conditions in Estonia, which accounts for now slightly more than a quarter-hour auto business line. Conversely, B2C ARPU increased by 13%. This growth was driven by price and packaging changes implemented in Lithuania during the autumn of 2024 and 2025. We strategically postponed B2C pricing adjustment in Estonia to support our customers during a challenging period. However, the package update was introduced there in May 2026 and is already in place. The C2C segment faced volume headwinds during the period. Listed ads declined by 25%, active ads similarly by 26%. Despite this inventory pressure, yields improved substantially. Revenue per listed ad rose to 22% to 41 euros. These gains were driven by our April 25 and March 26 price changes. Yield growth was supported by an increased consumer preference for premium, longer-duration listing packages that we intend to upsell, that also include our car history check service, adding to an overall marketplace transparency. Overall, performance was impacted by two primary external factors. First, the Estonian card tax created a tough year-on-year comparable due to the transaction surge prior to this introduction, and the transaction in the Estonian market dropped by 43% year-on-year. Second, the region experienced its coldest and longest winter in 30 years. The severe weather disrupted typical C2C activities during January and February. We provide the more detailed monthly charts to illustrate both of these effects in the appendices of this presentation. As a result of these factors, combined car transactions across both markets declined by 11%. Meanwhile, the average car price continues to grow at a moderately 2%. Despite these challenges, we firmly maintain our leading market positions. AutoPlus holds a five times lead over its nearest competitor, while Auto24 holds 28 times lead in their respective markets. Looking forward, it's encouraging to note that trading trends have improved since March 26. Our jobs and services business line delivered strong growth. Revenue increased by 9% to reach 17.4 million. Growth was closely mirrored in both B2C segment jobs and C2C segment services revenue streams. In the B2C segment, jobs RPU increased by 8% to 496 euros. The expansion was supported by targeted price changes. The total number of active employers grew by 1%. This increase reflects our continued ability to successfully penetrate the long-tail customer segment. The C2C, or services segment, achieved a 12% increase in active listing. The momentum was driven by an expanding client base and robust user engagement. While overall volume was healthy, the yield per active ad in services declined slightly by 3% to 26 euros. uh this compression was primarily due to a shift in the mix of service providers on all platforms specifically a high yield building service provider segment experience a very high demand for them reducing the need to advertise in this hot market supported by a boom in real estate the ccc severed segment saw a 12 increase in active ads driven by a growing client base and strong engagement. While volume was healthy, the yield per active ad and services declined slightly. Underlying labor demand remains well supported by a resilient economy. The stability is reflected by a strong average salary growth of 8%. Finally, Citibankus firmly maintains a five-times leadership position over its nearest competitor. This established market share ensures we remain the primary destination for job seekers and recruiters in Lithuania. Our generalist business line, which serves as a defensive proponent of our portfolio, delivered a revenue growth of 3% to reach 13.6 million. We achieved a significant 23% yield improvement on Scalbo, our largest generalist platform. Consequentially, revenue per listed app increased to 10 euros. These gains were driven by strategic pricing changes of both value-added services and listing fees. An increased consumer uptake of premium packages also supported it. These adjustments offset a 13% decline in volume of paid listing ads. The largest share of revenue on Scalbu originates from vertical categories, such as autos, property services, and jobs. Because of the structure, our own uh specialized vertical platforms act as its main competitors strategically we're entirely comfortable with users shifting from genitals listings to our dedicated verticals our specialized platforms to provide a superior user experience and unlock a higher monetization opportunities total inventory including paid and free remained highly resilient for the period active ads declined by a minor two percent remaining very close to last year record levels Crucially, our active ad accounts encompass both paid and free advertisements from customers. This blended approach ensures our platforms remain the primary destination for organic traffic. It also serves as a powerful competitive mode built on unique content. Our generalist portals firmly maintain market leadership across their respective regions. Scalibus stands as the fifth mobile-visited website in Lithuania. it currently holds a commanding 24 times lead of its nearest competitor. In the Estonian market, Osta maintained a player two times. Moving from KPIs to our product development, we continue to execute on our strategic aim of investing in fit-for-purpose technology. Our approach to AI focuses on practical tools that reduce user friction and enhance platform efficiency. Ensuring our marketplaces remain the definitive starting point for the multi-population. At the CVBankas, the job seeker onboarding experience was significantly streamlined through the integration of AI-powered CV creation tools. Candidates can now upload existing documents to the platform. The system automatically parses and populates a profile, removing the friction of starting a job search. This feature has seen a rapid adoption across the user base. 51% of all new CVs are now generated using this app. As a reminder, SiriBankas operates strictly as a closed ecosystem. Candidates maintain internal profiles on the platform rather than relying on external documents, TV documents. The structure results in a highly organized database covering a significant portion of the labor market. Consequentially, this asset provides us with a highly defensible and future-proof data mode. We also mean a fully improved job search functionality on SiriBankas through AI-powered synonym matching. So job seekers no longer need to know the exact wording or the specific role title they're seeking. The Optimize Search Engine now actually automatically identifies and displays jobs with similar meanings. On Scaliboy, we launched a Powered Image Moderation to enhance platform safety. The service automatically checks user uploaded images for prohibited content. Furthermore, it enabled our moderators to review and improve moderation parameters and patterns directly on the automotive segment we introduce ai driven automation to the listing process on both auto plus and auto 24. the system analyzes vehicle images external technical data and user descriptions to automatically generate listing details it also automatically populates key technical attributes of the vehicle the automation reduces manual input for sellers, increases data accuracy, and improves search relevance. In real estate, kv.ee, we introduced new service packages specifically for real estate developers. This initiative marks a shift away from shared broker plans, improving monetization while offering more targeted marketing and analytical tools for them. They update also groups related listed listings under their prospective real estate development. The structural change follows the path of Arvadas where we developed segment where developer segment let revenue grow in the past couple of years. On Arvadas we launch a new lead generation feature called Requested Viewing. The tool allows potential buyers to submit contact details and preferred viewing times directly through the platform. By removing the traditional barrier of a phone call, this feature increases total lead volume. Furthermore, it provides a marketplace with deeper insights into the user intent. Strategically, we are building a comprehensive data layer across our online marketplace. This goal was furthered by our June 2026 acquisition of Tzendobanka Business in Latvia. It's a leading Latvian real estate data and market analysis platform. Cenobanka aggregates property transaction data from the registries, listing information, and market reports. It serves as a key business tool for brokers, appraisers, developers, and financial institutions to assess property values in Latvia. Following our acquisition of Punto in Lithuania last year, Cenobanka strengthens our proprietary data set.

It provides the technical foundation for advanced market intelligence features across our footprint. and finally it provides a structured transactional data required to develop agent-based interfaces and thank you and i'm heading back just in us thank you for the output thank you arturas the politic economists have experienced a remarkable growth over the past three decades driven by a strong export health healthy labor markets increasing productivity and a vibrant technology sector. The region also have benefited from a strong public finance, solid credit profile, steadily rising purchasing power. These fundamentals continue to create attractive opportunities for both our customers and BCG. Looking ahead, we remain optimistic about the economic outlook. In particular, Lithuania, our largest market, where over 70% of the revenue is generated, continues to be one of the strongest performing economists in the European Union, providing a solid foundation for our future growth. The group expects revenue growth of around 10% in 2027, with growth anticipated to be slower in the first half and faster in the second half of the year. Real estate, auto, and jobs are expected to be primary growth contributors, while generalists is expected to remain broadly flat. Revenue growth outlook reflects confidence in our product pipeline and pricing and packaging changes, but cautious on the inventory trend. We expect a full year margin to be in line with previous medium-term guidance of mid-70s.

So, thank you for the listening, and now we are open for the questions.

Thanks very much, Alastair from Investec. Three from me. Firstly, could you talk a little bit more about some of your assumptions for the guidance? I mean, particularly in the auto segment, obviously some sort of easier comments given the Estonian tax situation, and also the weather, sort of how much the kind of Verticom sort of supernormal growth you might see there sort of contributing to the guidance for this year secondly you just touch a bit more on sort of competition um in both i guess lithuanian autos and also in sort of generalist with you know vintage and the like how do you think about sort of marketing spends potentially uh going forward and then lastly just on sort of data products how are you sort of thinking in terms of you know latest launches and rollout um about how you manage the pace of that in the context of any sort of dilutive effect on margins thank you all right so I will speak about the

guidance and competition and Arturas can cover the the the data question so on the guidance we feel confident in what's within our own control so this is a pricing and then packaging We already implemented the C2C pricing in spring, and we scheduled to implement the D2C pricing in autumn. We feel that underlying markets, especially in real estate, but also increasingly in automotive and also in jobs, is well supported for the pricing events. and we will target yield expansion beer in line with our previous practices. And we have high expectations on the pricing events. That's why we are planning the second half growth to be higher than the first half because most of these pricing, B2C pricing event, uh will contribute to the second half where we feel more cautious are on the inventory and on the inventory we need to speak separately automotive real estate uh in in automotive uh we have a two different uh directions in in estonia the recovery continues and there we have a positive inventory growth so far automotive business in Estonia recovered probably 70-80% of the expected recovery level if we compare the number of transactions to a year ago so this number is around 40 percent month over a month but still around 30 percent below to two years ago we don't expect that that to recover fully to 100 percent because we were we think that part of this market will not recover especially cheap cars but our expectations that it should reach around 70 85 to 90 percent of the previous market so in in estonia market we still have around 15 percentage points to go in terms of the recovery in lithuania the dynamics is different lithuania and automotive markets performing very well last year in terms of the transactions it grew eight percent it's a big increase annually uh so in lithuania we have headwind inventory headwinds because lithuania and economy is doing well uh purchasing power power is increasing the time to sell a car is decreasing so that's resulting in the inventory headwinds but as explained earlier this is a good timing good moment for the pricing events which are scheduled in autumn in the real estate real estate market is doing very well especially Lithuania but also Latvia Estonia in Lithuania we had a record number of transactions last year and this year we expect to even have a higher number in such a hot market naturally there is a headwind in terms of inventory because it's the transactions happen very quickly but also we implemented in C2C pricing changes and we significantly increased the penetration of the premium, most expensive package from roughly 20% to 30% to half of the whole choices. And this also leads to a lower number of extensions. So that's why we are expecting the headwind in terms of the inventory, but still a very positive environment for the B2C pricing event. coming in autumn. And the jobs market has continued to deal well. So this year, we expect in Lithuania, the salary growth around 8% average salary growth. So it's a good environment for the labor market. And the pricing changes are happening also in autumn year, but it's being implemented gradually a month over the next 12 months. So we are feeling, you know, optimistic and confident in all the three verticals, especially taking into account the pricing events coming in autumn. But where we have a cautiousness is in inventory. So that explains our guidance. On the competition part, would you like to cover? Autoplus, Autogutness Dynamics, or I can start, maybe you can give me. so the auto plus has currently five five times lead compared to auto gibbous historically that's one of the highest lead we ever had when we ipo'd our lead was three times and 10 years ago our lead was less than two times so the highest lead we had ever was six times a year ago uh during the last year altogether was much more much more active in marketing uh the including the tv advertising and uh well arithmetically it reduced the our lead from six to five times but we are not too concerned on that because you know the it does not impact our you know our, you know, fundamentals and, uh, and, uh, you know, considering battle to get us so on by the private equity, local private equity, uh, we also think that it will not, you know, this increased marketing expenditure will not continue forever. Would you like that?

Uh, we'll talk more about, uh, the generalist platforms as the competition issue was back there. So we're still probably repeating ourselves that, uh, the segments that are competitive so that home goods and oriented to consumers makes up a small percentage of scandals overall revenue uh what we're happy with is that we are maintaining the content on the platform that we have which is the strategic aim and actually positioned as well uh the traffic numbers are healthy we're not losing anything and actually gaining in in that sense but there is some natural let's say limitations in the consumer segment on these smaller segments in in terms of pricing however he's never where our new revenue driver on on data and data product uh uh yeah so on on data and related products um we're following the pathway which is client needs based primarily AI may be a means to get there rather than of the goal itself that's how we view it uh we're strengthening this data layer which happened before in autos with the current history and finally not that data pool we're progressing the same way in properties with one to Lithuania and outside the bank in Latvia and uh overall viewing Spain uh we have here with the tech stack we have we don't see it as limitation there's incremental improvements that are required but it's always been the case and and also the team setup seems seems good in terms of the know-how and the qualifications they have so no major changes or no no no no really much changes in the future that we would foresee apart from our incremental improvements we aim to make this this knowledge our competence so most likely will not rely on a lot on third party providers i'm not talking about the elements but other service providers to fill the gaps now Now, on the cost side, majority, we see that in a very near term, these costs will reach probably about a million per year. And majority of that are the people costs, of which the majority are already big, meaning that we already have that team in place that makes up the cost. uh there is naturally some probably token cost involved into that but we are designing everything this way that it doesn't blow uh our token budget or anything like that in any meaningful way unless there's direct and medical error i want to do just a few words also on data And so we feel that the data layer is really creating a strategic advantage of our platforms.

To give you an example, the car history report we developed one, two years ago, one and a half year ago. Now, at 30% of all the listings in Autoplus have the car history report. That's double the amount compared to a year. and it's really creating our competitive edge and competitive advantage and uh it and it's you know and it's very hard to copy to replicate and uh and uh that's really a defensive defensive mode for us same happening and same same tragedy we have it for the real estate where we invested afternoon to last year uh this year we are part of some mob bank but uh but we feel that this is you know kind of the right strategy to go and it will improve our marketplaces on the cost sides about the data products so we also build those to be profitable uh probably not as high profitability as the marketplace products but still uh probably 50 plus margin on the data products uh you know we we sell most reasons and bank acquisitions and it's the small business but it's not that money burning will you worry second hi it's uh will back from bmp para a couple for me um coming back on the

outlook for the year um you know one thing that stands out is that you push c to c yield monetization by over 20 percent in the you're gone perhaps understandable in the context of some of the inventory headwinds should we start to worry about the sustainability of that kind of increase you know there's some sort of cautionary tales from across your european peers about pushing yield too hard and having ramifications so just how you think about that question um secondly could you help us think through what a realistic number for the buyback is this year is it a similar quantum to last year is it double this is quite a long statement but i have kind of no idea what buyback number to assume so just some color there um and then lastly the guidance on generalists sort of stands out for being quite weak no growth um could you just remind us what factors have impacted growth the year ahead and should they abate from FY28? Thank you.

Maybe I'll start about yields. We'll answer the share buybacks and probably Arturo's can cover the generalist. On the yields, yes, the yields for CTC grew around 20% last year. But even though kind of percentage-wise, it might look high. But basically, it was like adding some, I don't know, five euros or 10 euros to the listing. And when you're transacting such an expensive item as automotive or real estate, this really matters in the end. So I think that whenever we think about the yields and CTC and the possible drop-off rates or a possible we think that we are here looking more or working with the time because the price sensitivity on the digital products are declining over the time and people are more and more eager to spend for and pay for the digital products and it's not uh the price itself what's what's the issue but more like people's uh you know expectations or people's uh you know mentality so i think that every year uh you know is positive for us because people are more and more comfortable paying for digital products and and the fees they pay are really marginal to the asset values like with that maybe a couple of comments the the yield growth well it's in probably the average of averages so it masks a lot of details behind it it doesn't mean that in every segment in every micro segment the change was like that we apply value-based pricing so we adjust for price

sensitivity always in the for example a cheaper segment we monitor drop-off rates which are intact after the changes and also uh the the savage yield growth is very much affected by the package mix it doesn't mean that all prices grew by 26 percent it's that we optimized the pricing structure so that clients themselves chose to pay more that improving to their sustainability that's so that's definitely important to flag that you know the penetration of our premiums premium most expensive package increased almost doubled from 20 30 percent to

half and this actually also you know impact the euro lena would you like to cover buybacks yes so the statement about capital location uh in the result statement is basically let's say two major messages one is accelerated buyback and the other is moving to dividends growing in line with adjusted net income and to have the flexibility to use to allocate capital based on how we see most value and you know to answer simply we don't have a target level of that target level of leverage we don't set the mechanical level as such the base and the scale of buybacks will depend on the market situation the also additional funding whether and how much we can get alternative uses of capital as well so and you know currently in the end of may we asked shareholders for 10% authority to buy back ECGs issued share capital and at the NGM we intend to ask for 15% for the next year so the board is very much supportive of the share buybacks in an accelerated way based on the market conditions and all the rest of what I already listed we'll see where we get but maybe just to add that also one of very important for us is to keep the flexibility and also prudent leverage. So we'll be watching that as well.

Maybe just help us accelerating the buyback versus what base, age two, full year, three months, nine months, one month, just not accelerating, just to clarify, not accelerating from this standpoint, but we accelerated already in 2026.

So just to continue accelerated share buybacks because currently we're in the market buying back uh based on the state harbor limits so this is already um the last one was on the generalist competition so talking about the competition between our own ecosystem so the setup is as mentioned is the way that uh generalist is sort a moat and a feeder of customers to the vertical platforms, which are better monetized. And the synergies works well in services, jobs, autos, and real estate. So we're comfortable generally with clients moving to the more expensive platforms.

Probably the last thing on Generalist to mention that also, you know, Generalist also competes in categories, let's say, closed categories with Vinted. And we are also addressing this issue. Currently, we are in the final stage of developing the Buy Now functionality on Scalbo, so that should strengthen the position.

Jess, I saw that you were... hi thank you it's jessica from pill hunt um we've just got a couple please um the first one on you've given the lots of color on the different verticals but when we think about the overall numbers you know outside of generalists which segments or verticals can we think about in terms of a higher growth than the group guidance versus lower and second one is just on costs um if you look at the cost last year and one of the biggest drivers is added headcount so is there anything baked in for this year that we should think about um you know what kind of growth rates we should think about for the overall cost and is there anything we should factor in and just the final one um just what you've just said about generalist um you know when you look at generalist you compete also with the likes of vintage and some of the others and um to my understanding you only charge on the high value items so you know are there any initiatives to grow in terms of you know to support the growth and actually could you actually charge for some of the items which you don't charge for right now so uh i will answer the about the verticals uh the luna will cover the costs and the about the generalists that would us uncover uh so on the verticals we think that

the real estate will be a growth champion again this year because of their supportive underlying market and then the pricing actions we are taking we took and we're gonna take in autumn Also, we are optimistic on jobs, because jobs have accelerated last year from 7% in H1 to 11% in H2, but the market is also very supportive, because this year the salary is predicted to grow 8%, average salary predicted to grow 8% again, the economy is doing well. So, you know, the labor market looks also very supportive for the job portal to grow. And automotive is also, you know, in a good position to grow, especially taking into account the lower repairables and the recovery of the automotive market in Estonia. so kind of all the three verticals but probably real estate should stand out on the costs on the costs uh you know reported reported the operating expense uh fluctuate uh in the recent years because of esp mainly which is performance driven uh so it's also prudent to look at the costs before this performance share cost line

like this year the cost was 0.3 million but uh this the cost is expected to increase uh next year to normalize in line with normalizing the results um so if excluding the psd costs operating the cost line is expected to grow in line with historic numbers and roughly in line with revenue regarding the generals maybe a bit more flavor of how the pricing works on on standard so the monetized we monetize the vertical categories for that the three that services

jobs all different property that's one thing for the remaining categories uh we monetize business customers including the semi-professional business customers who are selling something as a means to do business rather than they own things. So it doesn't matter on the value, it's more this type of structure. In order to reinitiate a growth in this general segment, however, we are well progressing on the transactional by now functionality that should go live the next year.

And it would serve as a nice addition on the current listing revenue we have rather than replacing it just this year it's already started yes andrew andrew hey guys it's uh andrew here from barclays i've got three if that's okay first one's uh coming back on ai sorry and to i guess get a bit more context in terms of how you're thinking about new products into next year and i guess particularly areas and things like you know conversational search tools for your dealers or agents you know some of the things that your peers are working on would be helpful to understand where you guys are at on those second one is to clarify where you're at on b2c pricing in estonia autos did you say in the remarks that you put something through in may apologies if i misunderstood that would be helpful to understand what went through and how it feeds into your thinking in the autumn and how much tolerance there is for pricing in dealers in estonia and then third question is is on mna um i guess kind of curious that you've chosen to do a small deal in in latvia which maybe hasn't been such a focus in the past so how are you kind of thinking about mna more broadly and also kind of views on the latvian market within that thanks um so i got to start with a ai related initiative so if you think let's say we approach

the question from the client needs based way we're just seeking for the places where there is fiction on how ai and can help solve it so bits there and they're already introduced uh that one of the big projects we're working on and also set set to go in the in this you know already started there's as many words for conversational ai assisted ai search you name it in many different ways uh but it's going to be the focus uh to to get launched the next year and we're progressing there well sort of we're set up the data processing pipelines so we can basically search not only by what's provided by the seller but also relied what's visible in the photos uh what's visible from the third party data sources we also have from our data platforms and combine that to deliver the better results for the customer. But the seeking is to, firstly, make this available within our systems. And if the situation changes somehow, we don't see right now from the Gen.AI platforms themselves, so let's say then the absolute majority of work is having these products in place rather than connecting them.

Actually, Artura Sauer, the key guy in AI, you know, strategist. So he's a very, very good person to talk about it. But mainly also, like a general thinking, our, let's say, about the user experience and about the conversational search. So currently, we are in the testing mode in real estate, but we are not... rushing we are not kind of pushing it to launch as quickly as possible for us it's important that it functions well and uh you know and the users are not disappointed with it so we we we probably you know we will make the final testing only only then we will launch that but also the thinking is that the current solutions like you know filter-based search it's just does a job very very well and and we don't have a very high expectations that once after launching the conversational

search that suddenly everyone will start you know using it massively it's a spectrum basically you have uh filtered in search in one end and full chat interface on the other we're pretty sure and the evidence from the initiatives that here shows that only conversational within chat experience is just not what works for customers either on the platform or either in the lm tool however the filter base search naturally has some uh improvements to be made to follow the blind spots and so we're setting to take uh best of both worlds try to improve what's working rather

than recreate it on the b2c in estonia so we delayed the pricing event a year ago not a year ago in autumn because it was like a peak of the really the most difficult period for the dealers and we did implement it in may this year the scope of the pricing event was quite minor this time because we still see that the dealers are price sensitive and they are emerging from this crisis but but but they are still you know thinking how not to increase their expenditure too much so it will have maybe less impact on the revenue growth for estonia but sona overall is recovering well it's since january it's growing double digit and you know they were happy with the progress on the mna part on the mna part so i think that there might be some other add-ons uh let's say like like the one that we had in latvia uh and and uh because we think that actually you know uh with especially data products we we're strengthening our embedded mode and and when we do these acquisitions we always think can we build internally how long it will take and how long it will uh uh how much it would cost or is there an existing tool which we can plug in easily uh so so far the the last few acquisitions which we did onto and xeno bank which translates into the price bank uh properties so in our thinking where it was cheaper and definitely so much quicker to acquire business and to plug in rather than to build from scratch. Just a reminder, in car history report, business, we build it from scratch. In fact, Arturo's did led the project.

Can I just clarify on B2C autos in Estonia? Are you still planning to do an increase this autumn as well or what's better in may and now we shouldn't be expecting anything it's autumn 27. uh that that would be to to you know close the pricing events if we were to implement not so no no plans for us or for additional changes okay so nothing september 25 small may 26 nothing september what's october september 27 i mean i think three to next year yeah and in autos estonia In Lithuania, it was scheduled. Sure. Okay, thanks.

Marcus.

Yeah, hi. Marcus Stewart, JP Morgan. Can we actually follow up on Andrew's question on the AI topic? Obviously, we have now nine months of discussions around this topic. It seems also what you said today that the focus is more to be better in-house, but to really bet on in-house solutions on your own tech team you highlighted sort of like the traditional way works pretty well yeah obviously it's going to get improved but in a nutshell um doesn't need much i sit here and i see others buying off the shelf solutions from entropic from open ai and these are these big words and i'm just sitting here and really struggling to to understand what is the difference is the difference that you say okay we are in a really niche markets our market shares us proportionately much higher and therefore we can afford plus we have a very strong tech team what is sort of the the the argument really to to play it a bit differently now that would be the first question the second question is then on costs again um and they said um on on the cost based broadly flat obviously we have the guidance but what should we think about personal cost including inflation you've heard for the market it's what around eight percent or so i i bet it's maybe at that level for for you as well in terms of inflation and you're hiring as well so what is sort of like a realistic number in terms of personal costs going up yeah i can stop them uh regarding the bit probably a bit

of clarification needed on buying the third-party solutions here uh we're not building our lms or anything like that and replacing what they can offer with the tools uh we're reusing quite substantially their solutions in our process it's just that there's no external specialist or external third-party company doing its forms for example where we could develop the agent we want to have know-how this is the core upcoming in the upcoming years to have it within the team rather than relying on the service provider i wouldn't say there's uh in terms of partnership the lm's i wouldn't see that we're doing something differently in this sense is it for example the question then comes because what we hear you seem to be pretty relaxed but token costs because your infrastructure allows it that you have to like very sophisticated search better ways to make it faster by just accessing your data very very quickly and therefore you don't have this token cost problem that's sort of like where to get so in in the context of the marketplace we see that the core token usage is sort of once a listing to process it and then to prepare it to be accessed later so it's more or less fixed things that we can control um and then there's just uh different ways how you develop how you use the tokens during the search and we see pathways that actually token cautious if we talk about the search with the most adopted thing and has the probably the most potential let's say risk to go but at the same time there's uh the technology well it's hard to predict which way it's going to go but we see the opportunities of these relevant capabilities actually coming to the user devices as well, as introduced in Google and Apple events in the past couple of months, where I think if sometimes you can pick up data cost yourself, you can use some on the, let's say, use devices. It's just one of the possibilities there, but there are numerous methods to put that in check.

Also, I would add, I think there is a backend solutions, let's say, And I think that we have progressed quite well here. Just an example, let's say, it's a CV creation with AI help. We just upload the PDF and we create a CV. Moderation, many other areas. So I think that we are quite advanced and we are not lagging behind. On the other side, the front-end facing solutions, let's say a conversational search. i think it's at the moment it still uh uh feels overstated or or in fact you know when we speak to the peers who have already launched those they are not working so well but the the usage of those are very tiny and and we kind of initially expect that suddenly people will start looking for apartment with bright living room but in fact they just type i want an apartment and center which is you know perfectly you know search through the filters so so probably in in this context maybe we're slightly behind but but there are no good working solutions yet and and we see it as an advantage because we we might see what others are doing and to learn from those by the way you know once we will launch this conversational search will be quite advanced because we'll already have ability to look into the pictures to understand those and it will not will be already quite quite enhanced on the cost base and personal costs lima would you like to

cover so maybe slightly slightly repetitive but uh but in general you know the people cost is the key part of of our costs all the developments are done in-house by by the team and also it's again it's important to look at the costs uh also separately so esp are separately and then salaries separately so again if esp costs are expected to normalize which is going to be in terms of percentage growth higher the people cost the salary costs the total other part of the people cost is expected to grow in line with historic trends just slightly you know the growth is slowing down a little bit because of the wage inflation growth moderating a little bit as close to eight percent is expected for this ongoing year in terms of wage inflation in the Baltics. We don't see that happening. This is what brings the cost a little bit down, but it's, to reiterate, it's a key part of the cost and expect it to continue in the teams looking without the ESP costs.

Maybe just also to add, quite a big part of our team is IT team. And historically, you know, the IT salaries used to grow much quicker even than the market average. So it was not unusual to see the IT, you know, salaries to grow 15% or, you know, annually. I think now the pressure for IT personnel or developers has been reduced.

Thanks, Giles, Tomp and Jefferies. Yasinas, what are you looking for from Arturis, a COO that you weren't getting from Simonas? Arturis, we're going to talk about you like you're not here. And with Simonas going, who's going to be the GM of Scalibu now?

We have a GM for Scalibu already for two years. It's a different person. Well, you know, Simulas was one of the first employees in the company and definitely contributed a lot to the success and, you know, it's very sad that he's leaving, but, you know, Arturas himself, he's an IT entrepreneur. 15 years ago, we acquired the business from him, which he developed, also programmed, sold, expanded, so multi, you know, skilled, multi, you know. And since then, Arturas were managing, he was managing scalable for a year, then Autoclus for 10 years, Arvalos for a few years, and then working as a development director, especially leading IT topics. So I think that his new responsibility definitely will enhance and support our AI organizational transformation. it will definitely become a much higher priority and I think that he was already leading for more than a year or almost two years and being having this entrepreneurship skills I think he will be just an excellent person, the best person you know uh and then to replace simonas and um and uh and you know looking historically he went through all the biggest most important business divisions he knows knows intimately well and and uh that was part of our succession planning because we already kind of identified that that could have five years ago probably that in case of uh simonas leaving that put a safe note just to follow up and scale you my mistake around simonas um transactional why is it taking until next year not next year this year so this okay next financial year but this calendar year this this no you know

why are you gonna launch transaction we are working on it already for half a year uh we would love to well it's on the final stages and probably to be launched within a month Dave Morgan Stanley, just a quick one on the yield expansion once when I kind of elaborate on how much of that is from pricing, how much different products, how much is it from maybe dominance, maybe in FY26, and also just a general guide go for how should we view the mix between pricing, dominance, etc.

So for the BTC customers, the biggest part would be pricing. but also added a very strong product update last autumn. So far we added car history reports and we added evaluation tools for real estate companies. So while it's difficult to quantify exactly, but we can say both. What made a bigger part is price changes because last year already an underlying market was doing very well in C2C segment. Probably, again, two-thirds was the price, but one-third also came from the upsell of the premium package, which grew from 20% to 30% to 50%.

Just adding a bit of flavor, the structure of how we're selling the products to our business customers are absolutely mainly bundles. It's not that you can, it's not possible to buy a particular service off the shelf. you choose either good better best type of package so that's why it's a bit more difficult to pinpoint was it the price or was it actually the product in a sense on the separately bought value-added services a prominent product it's just worth noting that that it's in single digits of our revenue so in b2c so it's not what we rely on so there's not much let's say should the reordering happen in the AI age it's not affecting Morning everyone, Sean Keeley from

Pamela Ibram I've got a couple if that's okay, I guess first of all you've seen this, I think it's fair to say that a lot of public market investors are very focused on AI as risk, reward etc, but I'm interested in your take on how private market investors are thinking about the issue I know you yourselves will look for opportunities. And I'm sure you're more on the pulse of how some of the private market operators are thinking than maybe some of the rest of us. So interested to get your take on that. Arturo, it's a couple for you. Can we, is it possible to help us disaggregate the impact of selling longer duration premium products within real estate from the ARPA increases? I just want to get a sense for how much of that uplift in yields has been driven by shift in product mix versus price um and then you referenced that new build has been a bit weaker in lithuanian real estate than uh the broker market just in terms of advertising less are you able to give us any color on if there's any mix shifts there and then an apologies for another another couple if that's okay um just on tax and the estonian automotive um you've got a six million additional euro tax charge this year should you distribute profits should we how should we think about tax rate going forward is it fair to assume that the estonian business's margin is equal with the group rates are there any offsets etc just thinking about not necessarily this year but but outer years and then finally just given the profiling on Estonian B2C in automotive. Can you just remind us how big you're expecting Estonian automotive to be as a percentage of automotive this year? Apologies for quite so many.

We're only three people and have five questions. Probably I can start with private market perceptions about the market I think that, well, it's also quite obvious from our capital allocation policy we think that public markets overstate the ai risk and ai impact and and um uh you know overreact so this is why we kind of you know accelerating our share buybacks and this is not happening in private markets i think private markets are much more you know confident and usually especially when the private equity firms invest in the marketplace they do so much more research and probably I would dare to say that private equity firms are even more knowledgeable when we are investors and less less you know their opinion less dependent on you know or less they are less over overreacting on the on the impact from the longer duration in real estate and pricing

i thought it's explained it's difficult to say exactly but probably two-thirds of pricing one-third the duration that would be you know just understanding pretty much the absolute majority of the direct price increases were less than the yield growth So what basically happened is it shipped from the middle package to the highest one, although the highest price didn't change that much. It depends on platform by platform, but it's a strategy that in the previous years, only four or five years ago, successfully worked in auto. And in property, we saw quite equal distribution between short and long packages. you're doing the same playbook moving to the longest ones uh making them very attractive sort of popcorn pricing type of thing and also it's a better user experience extension it's not something you're willing to turn on sort of under delivery and there was a question regarding builders and brokers probably a bit more connection to to the data standing in this case actually uh over the past year the builder segment in lithuania was performing very very well there's lots of inventory uh there at the same time with lots of advance so there's off market and it's actually uh considering this pension reform the window so it's not that long it's not going to be forever so everybody's that trying to sell at the same time so we actually did have the revenue increase from builders in both terms of advertising like value-added services and in terms of packages so that's actually worked pretty well and it's been for three years already a growth driver in the whole lithuanian b2c segment and the builder packages are what we're including in estonia probably that would continue to be next year because uh you know the the builders are also

have a very deep pockets and you know and uh when the new there are new developments happening so we need to invest more into marketing so we have a high expectations for that segment lina would you like to cover it yes of course um so actually answering to your question i think the good reference is the revenue split by country and currently we generate 73 percent of revenue from from lithuania 25 from estonia and two percent from latvia and given the margins are

you know quite similar broadly similar um actually this the revenue split could be used as the reference point and could you please repeat the question about estonia automotive btc what was the question here uh yeah just just on so i think i think you've said that you did a small uh btc pricing around in may there won't be one this autumn just when we're thinking about trying to reflect that through the automotive division can you remind us how big the current estonian automotive business is as a percentage of the mix 25 from the total automotive perfect thank you Any other questions?

And we might have some conference call questions.

So Adam, over to you, please.

If you'd like to ask a question via the telephone today, please press star for a while on your telephone keypad now. Final call for phone questions, star one. I think my side's back to you.

So thank you once again for coming. We feel really very privileged every time when we come to London in July to have such good weather. also Wimbledon and now it's a soccer tournament so thank you